Shielded Bitcoin Design Proposes Private Payments Without Changing Network Rules

A new design for Shielded Bitcoin has been published by researchers at cryptography firm alloc init. The proposal aims to enable private payments without changing the rules of the Bitcoin network, inspired by Zcash's privacy model.

Under the Shielded Bitcoin design, value denominated in BTC will be held in encrypted records called 'notes.' When funds are spent, a record will be published proving ownership of the funds and that no new BTC has been created; the amount, sender, and recipient will remain private.

The researchers estimate that a private transfer would take up about 700 virtual bytes. Since ordinary Bitcoin transactions range from 100 to 200 virtual bytes, Mikhail Komarov said private transfers could increase the fee paid to miners by about four times at an equivalent fee rate.